Correlation Between SEI Investments and Capital Income
Can any of the company-specific risk be diversified away by investing in both SEI Investments and Capital Income at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining SEI Investments and Capital Income into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SEI Investments and Capital Income Builder, you can compare the effects of market volatilities on SEI Investments and Capital Income and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in SEI Investments with a short position of Capital Income. Check out your portfolio center. Please also check ongoing floating volatility patterns of SEI Investments and Capital Income.
Diversification Opportunities for SEI Investments and Capital Income
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between SEI and Capital is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding SEI Investments and Capital Income Builder in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital Income Builder and SEI Investments is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on SEI Investments are associated (or correlated) with Capital Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital Income Builder has no effect on the direction of SEI Investments i.e., SEI Investments and Capital Income go up and down completely randomly.
Pair Corralation between SEI Investments and Capital Income
Given the investment horizon of 90 days SEI Investments is expected to under-perform the Capital Income. In addition to that, SEI Investments is 3.2 times more volatile than Capital Income Builder. It trades about -0.15 of its total potential returns per unit of risk. Capital Income Builder is currently generating about 0.28 per unit of volatility. If you would invest 7,082 in Capital Income Builder on November 27, 2024 and sell it today you would earn a total of 163.00 from holding Capital Income Builder or generate 2.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SEI Investments vs. Capital Income Builder
Performance |
| Timeline |
| SEI Investments |
| Capital Income Builder |
SEI Investments and Capital Income Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SEI Investments and Capital Income
The main advantage of trading using opposite SEI Investments and Capital Income positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SEI Investments position performs unexpectedly, Capital Income can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Capital Income will offset losses from the drop in Capital Income's long position.| SEI Investments vs. Commerce Bancshares | SEI Investments vs. RLI Corp | SEI Investments vs. Westamerica Bancorporation | SEI Investments vs. Brown Brown |
| Capital Income vs. Goldman Sachs Small | Capital Income vs. Ashmore Emerging Markets | Capital Income vs. Transamerica International Small | Capital Income vs. Franklin Small Cap |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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